Book Review: The Ultimate Entrepreneur – Ken Olson and DEC

For a long long time I wanted to find out a bit more about the history of Digital Equipment Corporation and its legendary co-founder Ken Olson. I’ve never worked on a DEC machine in my career, but many of their machines are famous, e.g. the PDP-1 and space war, the PDP-8 as the first ‘affordable’ mini-computer, the PDP-7 and 11 on which Unix was created, etc. etc. I did, however, use one of their services that they created in their final years. Anyone remember the Altavista search engine? And I remember their Alpha processor design and Windows NT running on it. There are a number of books on the history of DEC and here is a review of “The Ultimate Entrepreneur – The Story of Ken Olson and Digital Equipment Corporation” by Glenn Rifkin and George Harrar.

If you want to have a look yourself, it can be borrowed for free from OpenLibrary, which is part of the Internet Archive. It’s available in PDF and epub format, but there are too many spelling errors in the epub format that was generated from the scans. So I advise you to read the PDF on a tablet.

Published in 1988, just around the time I got my first computer, the book in itself provides an interesting perspective for me! At that time, I was a teenager and had no idea what was going on in computing. In fact, I just got my first computer, a C64, and had no idea of the larger picture. Other computers around at the time were the Commodore Amiga, the Atari ST and IBM PCs with their ugly text screens. That was my horizon back then.

The book was written by outside journalists and details the ups and downs of the company from the 1960’s up to DECs peak success in 1988. Ken Olson is quoted saying that he is ‘in the game for the long run, not to build something quickly, sell to a bigger company and leave – [which was] fashionable at the time’. I find this a very interesting statement. When I look back the past 30 years, the ‘quick, sell, leave’ strategy has never come out of fashion in tech.

While the book is mostly on DEC and Ken Olson, many other people that significantly influenced DECs strategy and products are also mentioned. Gordon Bell, for example, who also came from MIT, who is described in the book as the ‘Frank L. Wright of the computer industry’.

If you are looking for technical details you won’t find many in this book as it focuses on people, strategy and the company. But products are the core of the company so the authors mention a lot of products, what they were intended for and how they shaped the fortune of the company and the people there. Harlan Anderson, for example, who founded DEC together with Olson was squeezed out, according to the book, after the PDP-6, a high end and expensive machine failed due to reliability issues. The PDP-5, a low end front-end machine, on the other hand sold 10.000 units.

The story then goes on to the PDP-11, a mini computer and successor to the famous PDP-8. What I realized even more than before while reading the book is that the PDP numbering is no indication of how powerful the machines were. The PDP-10, for example, was a 36-bit machine for the mainframe segment , targeted for multi-user operation (time sharing). It was thus much more powerful than the 16-bit based PDP-11, which was a successor to the PDP-8 and targeted towards single user operation. The PDP-11 was also the first DEC machine that used 8 bit as a bytes after it had become a standard. Also, the PDP-11 was the machine that large parts of the original Unix were developed on (after a brief initial use of a PDP-7 by its creators).

One of the things the book talks a lot about is the initial great success and equally big trouble the matrix organization caused that was introduced by Olson to tame the chaos. In the context of DEC, the matrix organization refers to the company being organized in two dimensions. There were product lines, e.g. the PDP-11 product line and there would be functions such as production, sales, marketing, service. Each product line had to get the services of the different functions, so some people were partly working for a product line and partly for a service. In other words, two bosses. Still sounds familiar in other contexts to many of us, including me, today. In good and in bad ways I might add. The book also goes into the details of the ‘committee’ style decision making in DEC. In other words, while Ken Olson was DEC and DEC was Ken Olson, committees made the decisions and Olson influenced the committees.

Other people the book mentions that later pop-up in other places are for example Ed de Castro who got frustrated at DEC and founded Data General in 1968 and with whom Ken Olson was still angry for this a decade later according to the book. Tracy Kidder, who wrote a book about Data General that I reviewed here as well is mentioned as well. And Marc Porat is mentioned and I leave you to find out just who he is/was! It’s worth the effort, its magic 😉

As time goes on, the PDP-11 architecture, despite based on the 8 bit standardized byte and thus geared towards the future was reaching its limits. And this at a time when it, together with the PDP-8 models, was responsible for 90% of revenue/profits of the company. In other words, the huge PDP-10 was not a revenue generator for DEC. But the PDP-8 and PDP-11 were stuck with very small address spaces (16 bit in case of the PDP-11), so a new architecture was needed. And that was the VAX which stood for Virtual Address Extension. I have certainly heard that acronym many many times in the past. Initially, it was called VAX-11 to signal to customers that it will take the PDP-11 forward with it. Early models included a PDP-11 backwards compatibility mode so existing software could run on it. This was dropped in later models and was probably a good thing. Compare that to today’s Intel processors that still include 8086 ‘real mode’ compatibility from back in the 1980s.

The VAX architecture and strategy was largely driven by Gordon Bell and even the first VAX had a microprocessor. This was different to the PDP-8 and 11, which had discrete processors as microchips in early models, as large scale chip integration did not exist at the time. Even though the book doesn’t mention this, it seems that DEC must have started to develop its own microprocessors on the way to the VAX. This makes me wonder if they had their own chip production lines as well.

As the 1980s came around, personal computing came around. The book describes that back in the 1970s, Ken Olsen did not want to go to the low end and personal computing but wanted to stay with mini computers for personal use and the PDP-10 mainframe with terminals attached to it. But he changed his mind in 1980 and several groups were formed to develop a personal computer. Apple, Commodore and Tandy were already around, but nevertheless, 1980 was still early days for personal computing. The IBM PC only came out in August 1981. DEC was late to the party and in 1982 launched three completely different products:

  • The Decmate, a successor to the PDP-8
  • The Rainbow: A system with a z80 and Intel 8088 so it could run CP/M and DOS for IBM compatibility
  • The Professional 325: A PDP-11 based desktop (!)

Obviously, the PDP-11 based Pro 325 was DECs favorite as it was their own technology. However, it was not based on VAX, so actually old technology. Gordon Bell, for example, didn’t seem to like it too much. No surprise here. In the marketplace the z80/8088 Rainbow was much better received, with 300.000 sales in 1984. However, IBM sold a million PCs at the same time.

So while IBM seems to be the winner in this game, it was not really so. IBM PC clone makers took the market by storm and drove prices down. And price was the main thing the retail market was interested in. This didn’t work for DEC because they were not ready to compete on price. In addition, the authors say, the Rainbow wasn’t 100% compatible to the IBM PC, so major software like Lotus 1-2-3 did not run on it natively. For Ken Olson it was an uneasy situation and he complained that all those others out there are just doing that same and it’s just sub-quality engineering not worth doing.

It is interesting how the book portrays Olson’s swing in perception on the topic. At first he didn’t like personal computing at all, then he praised PCs at the beginning at the 1980’s and then went back into the ‘I don’t like them’ mode in the mid 80’s when it was clear that DEC would not succeed in this domain. He is quoted saying that ‘it is unclear what people will do with them in the companies’. From my point of view I don’t think that was the reality for most companies at the time, as nobody bought expensive computers without an immediate use case in mind. So the focus came back on the VAX and networking.

But things were still looking good for DEC at the time and the VAX workstations for the high end personal computer market competed nicely with Sun and Silicon Graphics workstations. At around this time, the book ends, actually right at the moment when DEC was at its peak.

As we all know today, this didn’t last for very long. CPU and graphics processing power on Intel x86 based ‘clone’ PCs kept growing at a staggering pace which brought the end not only of DEC but also of other high end workstation manufacturers such as the aforementioned Sun and Silicon Graphics. So after half a decade of decline, DEC was sold to Compaq, who, just a few years later also struggled and was absorbed by HP. And HP, well, at least one of the two parts it was split into, was almost bought by Xerox not too long ago. But I guess that is off the table for the moment. How fortunes keep changing all the time.

‘The Ultimate Entrepreneur’ a great book that tells of the ups and downs of DEC in a gripping way. Highly recommended, even if out of print now for decades.